Job Growth Moderates

06 Jul Job Growth Moderates

As if watching the final stretch of a horse race, we watched bond prices climb above their 100-day moving average just before the market closed yesterday. However, prices fell sharply at the opening bell as investors became sheepish before the first of two highly anticipated job reports. Unfortunately, this move lower put bond pricing at multi-month lows as interest rates push even higher.

ADP released their estimate of new job creations for the month of June. Surprisingly, it was below the markets’ expectations. It was reported by ADP that payrolls grew by only 158,000. Although the two reports can vary widely, it somewhat sets the stage for a possible weak report when the Bureau of Labor Statistics releases their estimate on Friday. Current expectations are set at 170,000. If the final results come in below this number, we could see rates stabilize a bit.

Stocks are trading lower in the premarket, as a negative sentiment begins to form around the global stock markets. Concerns of slower economic growth are one reason for investor concern.

The 10 Year Treasury Note yield is currently at 2.37%, which reflects a significant increase from the 2.13% level less than two weeks ago. This translates to higher overall interest rates, including mortgage rates. We aren’t too far off the 2.63% peak we saw earlier in the year. At this point, if bond prices don’t find stability in the near term, we could see rates climb back to 2017 high levels.

With bond prices continuing to fall, we will maintain our locking bias.